VC investing gets frothy, hitting 13-year highs

In a sign that the venture investing is getting to frothy levels (much like the stock market), the amount of venture capital investing has hit its highest level in 13 years.

Some 862 companies raised $10.7 billion in venture capital in the first three months of this year, the highest dollar-value level since 2001, when 957 companies raised $11.5 billion, according to DJX VentureSource. Information technology and finance attracted most of those investments, representing 32% and 25%, respectively. But while the dollar amount is up 18% from the prior quarter, the number of deals declined 10%, meaning investors paid up. Indeed, pre-money valuations hit their highest levels since the fourth quarter of 2012.

Among the biggest investments in the first quarter were Cloudera, raising $740 million with Intel as the lead, Lyft, raising $250 million with Alibaba Group, Andreessen Horowitz, Founders Fund and Mayfield in on that deal, AliphCom, raising $250 million, TangoMe, raising $215 million with Alibaba Group as the lead, and Intarcia Therapeutics, raising $200 million.

The San Francisco Bay Area represented the lion's share of deals done with 320 deals raising $5.67 billion. Interestingly enough while the Bay Area represents only 37% of the number of deals, the dollar volume represents 52%, underscoring the ability for Bay Area startups to price themselves at a premium to other regions.

Meanwhile, M&A activity in dollar volume hit its highest quarterly level since 2000. Some 119 M&A transactions of venture-backed companies in U.S. rang up $17 billion last quarter, the highest since mergers and acquisitions saw $23 billion in dollar transactions in the third quarter 2000.

And if that's not frothy enough, 73 funds raised $9.6 billion in the first quarter, more than doubling what was raised in the prior quarter. Technology Crossover Ventures $2.2 billion fund was the largest fund raised in the US.